FEATURE
CRUISE SHIPPING
MSC Cruises
The naming ceremonies of MSC Fantasia on 18 December 2008. From left: Mrs Sophia Loren, Mr Lucio Dalla, Mr Renzo Arbore, Captain Giuliano Bossi, CEO Pierfrancesco Vago, and owner and CEO of MSC and owner of MSC Crociere, Gianluigi Aponte. (Photographs: MSC Crociere)
MSC Crociere CEO Pierfrancesco Vago. (Photographs: MSC Crociere)
MSC Cruises operates 10 cruise ships, most of which have been built during this decade, in France. The European cruise group is currently heavily building up its cruise ship fleet in a eur5.5bn newbuilding program. With Italian onboard service MSC Cruises major operating areas are, above all, the Mediterranean, but also primarily the Caribbean and Northern Europe. The MSC Crociere group, or MSC Cruises worldwide, is headed by chief executive officer Pierfrancesco Vago. Richard Sasso is president and CEO for MSC Cruises (USA), Inc. The latest newbuilding is MSC Fantasia, delivered in December last year from STX Europe's shipyard in Saint Nazaire. With a gross tonnage of 133.500, some 50 percent bigger than the company's previous newbuilding, MSC Fantasia is the largest in the MSC fleet, and also the largest ships ever built for a European shipping company. As the first in a series of two vessels ordered, the 333m long and 38m wide vessel can accommodate 3,274 lower bed passengers and a crew of 1,325. The sistership in this new series of ships, MSC Splendida, is to be delivered in June this year.
The first vessels in MSC Crociere's investment program were the 58,600 gt 1,530 passenger Lirica-class vessels MSC Lirica and MSC Opera, delivered in 2003 and 2004 respectively followed by sisterships MSC Armonia and MSC Sinfonia in 2004 and 2005. MSC Musica, the first 89,600gt 2,550 passenger Musicaclass vessel followed in 2006. MSC Orchestra was build in 2007 and MSC Poesia was delivered in March 2008. In March 2010 MSC Magnifica, the fourth ship in the Musica class, will enter service. The announced value of the contract, signed in March 2007, is some eur410m or approximately $547m. The oldest and smallest vessels are about to be sold. They are MSC Rhapsody, taking 850 passengers and built in 1977, and MSC Melody taking 1,250 passengers and built in 1982. In September last year MSC Cruises agreed with Aker Yards, now STX Europe, to construct two more Musica-class ships at the shipyard in St-Nazaire. The two ships are to continue the Musica-class and are projected for delivery in 2011 and 2012, according to current plans. The financing is not yet finalized for the
vessels and the final project negotiations with the yard are not concluded. Estimated total cost of the two vessels would be some $1.1bn. To be named MSC Meraviglia and MSC Favolosa, the vessels are to be the fifth and sixth sister ships in the Musica class. The delivery dates of some of the vessels have changed from what originally planned at the yard recently, so changes might be expected also for these newbuildings, in the current market situation. What is for sure is that MSC Crociere will do what it can to get these vessels built. Reflecting the current market atmosphere though, MSC Crociere's chief executive Pierfrancesco Vago, at the ceremonies of MSC Fantasia in December, said he looked for a lower price of the two-vessel project. It is though quite common for chief executives to air their feelings from ongoing negotiations taking place during the days of ship ceremonies. It seems to be part of the negotiation strategy. However, when the delivery takes place the fleet of MSC Crociere will consist of twelve very modern big ships with an annual capacity of more than 1.4 million passengers.
Norwegian Cruise Line
In November, Miami-based NCL Corporation appointed Kevin Sheehan, president and CFO at Norwegian Cruise Line, to replace Colin Veitch as its new CEO. In January last year, New York based private equity group Apollo Management acquired a 50 percent stake in the company, the other half still held by Star Cruises from Malaysia. Sheehan, earlier a consultant to Apollo, became president of NCL in August last year. NCL reported a third quarter profit of $171.2m, with revenue for the quarter increasing by one percent to $639m. A year ago, the third quarter showed a loss of
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$8.6m. Still in the third quarter, NCL succeeded in increasing ticket price and onboard revenue yields. The company benefited from lower interest rates and favorable exchange rates, and succeeded to "end the quarter with over $525m in liquidity, positioning us very strongly for the future," according to Sheehan. For the first nine months of 2008, ending in September, NCL's net result was a slightly negative -0.87m, improved from a loss of -93m for the first nine months of 2007. Net sales were $1,675m, down from 1,678m for the first nine months of 2007. The company had interest expenses of $117m in the first nine months of 2008.
Long term debt at the end of 2007 was 2,978m. Total revenues in 2007 were $2,173m, giving a long term debt to revenue ratio of 1.37. The group had cash and cash equivalents of $170.4m at the end of the third quarter. . NCL is the only major cruise line to operate a U.S.flagged ship, which enables the company to offer itineraries between U.S. ports, but one main problem for NCL has been the profitability of its Hawaii operation. The company last year transferred two of its three vessels from Hawaii, which is now reported profitable. Pride of America remains cruising in Hawaii. Pride of
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